Mount Carmel Company sells only two products, Product A and Product B.

Mount Carmel sells two units of Product A for each unit it sells of Product B. Mount Carmel faces a tax rate of 30%.
Required:
a.What is the breakeven point in units for each product assuming the sales mix is 2 units of Product A for each unit of Product B?
b.What is the breakeven point if Mount Carmel's tax rate is reduced to 25%, assuming the sales mix is 2 units of Product A for each unit of Product B?
c.How many units of each product would be sold if Mount Carmel desired an after-tax net income of $73,500, facing a tax rate of 30%?

Question

Mount Carmel Company sells only two products, Product A and Product B.
  
Mount Carmel sells two units of Product A for each unit it sells of Product B. Mount Carmel faces a tax rate of 30%.
Required:
a.What is the breakeven point in units for each product assuming the sales mix is 2 units of Product A for each unit of Product B?
b.What is the breakeven point if Mount Carmel's tax rate is reduced to 25%, assuming the sales mix is 2 units of Product A for each unit of Product B?
c.How many units of each product would be sold if Mount Carmel desired an after-tax net income of $73,500, facing a tax rate of 30%?

Quizplus · Accepted Answer

The Answer of Mount Carmel Company sells only two products, Product A and Product B.
  
Mount Carmel sells two units of Product A for each unit it sells of Product B. Mount Carmel faces a tax rate of 30%.
Required:
a.What is the breakeven point in units for each product assuming the sales mix is 2 units of Product A for each unit of Product B?
b.What is the breakeven point if Mount Carmel's tax rate is reduced to 25%, assuming the sales mix is 2 units of Product A for each unit of Product B?
c.How many units of each product would be sold if Mount Carmel desired an after-tax net income of $73,500, facing a tax rate of 30%?

Mount Carmel Company Sells Only Two Products, Product a and Product